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ANZ facing $25m fine for misleading customers

delivery of food being paid for by credit card

ASIC is suing ANZ for misleading customers and failing to provide promised benefits in the final investigation to come out of the financial services royal commission.

ASIC has commenced civil penalty proceedings in the Federal Court against Australia and New Zealand Banking Group Ltd (ANZ) for failing to provide certain benefits it had agreed to give customers with offset transaction accounts or a ‘Breakfree’ package.

The regulator claims that between the mid-1990s and September 2021, ANZ failed to provide certain benefits, which included fee waivers and interest rate discounts, to approximately 580,447 customer accounts which has resulted in ANZ having to remediate nearly $200 million to impacted customers.

ASIC Deputy Chair Sarah Court said the case was yet another example of a widespread system failure by a major bank impacting thousands of customers.

ANZ’s Breakfree package, introduced in 2003, offered fee waivers, interest rate discounts on eligible ANZ products such as home loans, credit cards and transaction accounts and other benefits in exchange for paying an annual fee.

ASIC alleges that these entitlements were not always provided to customers.

ASIC also alleges that ANZ’s offset customers were entitled to interest rate reductions on eligible home and commercial loans but they were also not always provided to customers.

ANZ admits that it made false or misleading representations to customers that it had systems and processes in place that were adequate to provide customer account benefits.

ANZ further admits that the bank’s systems and processes were not capable of delivering those benefits consistently and that it breached its obligations as a financial services and credit licensee to provide services honestly, efficiently and fairly.

ASIC is seeking declarations, pecuniary penalties and other orders against ANZ.

ASIC and ANZ will submit to the Court that a penalty of $25 million is appropriate. The date for the first case management hearing is yet to be scheduled by the Court.

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